Stocks Rise, Treasury Yields Fall on Federal Reserve Pause Hopes
FlatRigor 629 sources
The Story
Equities moved higher on Thursday, and Treasury yields pulled back as investors grew hopeful the Federal Reserve may leave interest rates unchanged this month. The Dow Jones Industrial Average climbed 337 points or 0.6%, the S&P 500 rose 0.4%, and the Nasdaq Composite traded up 0.7%. The benchmark 10-year Treasury note yield last traded around 4.76%, declining after Federal Reserve Governor Christopher Waller said he would be inclined to support holding rates steady. On Wednesday, the 10-year yield hit its highest level since November 2023, climbing above 4.8%. Bets among fed funds futures traders for a central bank rate hike in a couple of weeks fell to 50.4% after Waller's statement, down from 63.2% a day ago. Rising crude oil prices, with West Texas Intermediate crude futures trading 1% higher at $92 per barrel and Brent futures advancing 1% to above $96, have put upward pressure on Treasury yields. US yields were already under pressure Thursday as the Japanese yen rallied against the US dollar, rising more than 1% to 156.1 yen. New York Fed President John Williams said Wednesday that rising long-term bond yields reflect a solid economy rather than inflation fears. Money markets currently assign a roughly 60% chance of a Fed rate hike this month, though this probability shifted after Waller's comments. Treasury Undersecretary for International Affairs Erin Browne stated Tuesday that rising Japanese long-term interest rates are impacting US markets. Nigeria’s September 2051 Eurobond yield has risen above 8% due to higher US Treasury yields and persistent inflation concerns, according to Victor Ogundijo, a fixed-income analyst at CardinalStone.
The Spread
Flat
What they agree on
- Equities rose and Treasury yields fell on Thursday due to expectations that the Federal Reserve may pause interest rate hikes.
- Federal Reserve Governor Christopher Waller indicated he would be "inclined to support" holding rates steady, influencing market expectations.
- The benchmark 10-year Treasury note yield reached its highest level since November 2023 on Wednesday, climbing above 4.8%.
- Rising crude oil prices and the war in Iran are contributing to inflationary pressures and affecting Treasury yields.
- Money markets show a chance of a Fed rate hike this month, though this probability shifted after Waller's comments.
Where they split
- CNBC and Kiplinger focus on the immediate market reactions, including stock performance and Treasury yield movements.
- Fortune and Jacobin emphasize the political and social implications of rising bond yields, linking them to the midterm campaign and wealth distribution.
- BusinessDay Nigeria and Nikkei Asia highlight the international spillover effects of US Treasury yields on other global markets, such as Nigeria's Eurobonds and Japanese markets.
- Reuters and Bloomberg report on the potential risks rising yields pose to US stocks and specific company performances like Snowflake and Broadcom.
Source Perspectives
Center8 sources
Right1 source